In a retirement plan, the employer commits to contribute a certain percentage of compensation each year and guarantees a rate of return.Under this arrangement, employees are able to calculate the exact lump sum that will be available to them at retirement because the employer guarantees both contributions and earnings.This plan is an example of _____.
A)cash balance plans
B)profit sharing plans
C)traditional defined benefit plans
D)money purchase plans
E)target pension plans

Question

Quizplus · Accepted Answer

A cash balance plan is a type of defined benefit plan where the employer guarantees both contributions and a specific rate of return, allowing employees to calculate the exact lump sum available at retirement.

In a Retirement Plan, the Employer Commits to Contribute a Certain